Dec. 15, 2014, 5:57 PM
- BHP Billiton (NYSE:BHP) and Rio Tinto (NYSE:RIO) are amassing vast copper holdings in a push to capture a greater chunk of the $140B world market, apparently aiming to squeeze out high-cost producers just as they did in the global iron ore business, Reuters reports.
- Separately and in joint ventures, Rio and BHP intend to mine millions of additional tons of copper, despite seeing an oversupplied market for the next few years.
- While Rio and BHP likely would not hold the same degree of dominance over copper that they do in iron ore - Codelco, Glencore (OTCPK:GLCNF, OTCPK:GLNCY) and Freeport McMoran (NYSE:FCX) will remain bigger producers for the foreseeable future - their influence on global supply would be enhanced.
- The drive in copper also could give BHP and Rio an advantage over rival Vale (NYSE:VALE), whose exposure to copper is less than half that of BHP and Rio.
Dec. 13, 2014, 8:25 AM
- BHP Billiton (NYSE:BHP) iron ore chief Jimmy Wilson says the days of $100/metric ton iron ore likely are over amid a supply glut and weak Chinese demand.
- Iron ore fetched ~$135/metric ton a year ago, but it is now below $70 as output from global giants such as BHP, Rio Tinto (NYSE:RIO) and Vale (NYSE:VALE) increases, hurting higher-cost producers.
- "It's hard to see the sort of significant bump that we've seen come from China happen again," Wilson says.
- BHP general manager for iron ore marketing Alan Chirgwin says the company expects China's growth in consumption of steel - in which iron ore is a crucial component - to slow to 0.5%-1.5% next year.
Dec. 9, 2014, 8:29 AM
- Mining companies sink in premarket trading as J.P. Morgan lowers its iron ore outlook through 2017, predicting prices will extend declines as growth in low-cost supply from the world’s largest producers outstrips demand.
- Iron ore will average $67/metric ton next year, 24% less than previously forecast, $65 in 2016, down 23%, and $69/ton in 2017, down 16%, the firm says; iron ore has averaged $98.82/ton YTD but recently slumped to a five-year low $68.49.
- "The only way the oversupply can be averted is if the low-cost producers cut back on their growth targets," which is unlikely, JPM says, as "feedback from recent site visits to the Pilbara suggests there is currently no consideration for slowing capacity growth from either Rio Tinto or BHP Billiton."
- BHP -2.1%, RIO -1.2%, VALE -1.2% premarket.
Dec. 9, 2014, 7:39 AM
- Mitsui (OTCPK:MITSY) agrees to pay $763M for stakes in a Mozambique coal project owned by Vale (NYSE:VALE), signaling confidence from Japan’s second-largest trading house in a recovery in coking coal prices.
- Mitsui will pay $450M for a 15% stake in the Moatize mine, one of the world's biggest deposits of coal used for steelmaking, and $313M for half of Vale’s 70% stake in the associated Nacala Logistic Corridor rail and port infrastructure.
- "The partial sale of the troubled Moatize mine and logistics project appears to be at a very attractive price for Vale. The proposed sale would likely make the company net free cash flow break-even for the year," BMO Capital says.
Dec. 5, 2014, 4:50 PM
- Vale (NYSE:VALE) says it may consider an out-of-court settlement to the massive lawsuit in which it has been accused of “stealing” a west African mine from rival Rio Tinto (NYSE:RIO).
- The suit alleges that Vale and former partner Beny Steinmetz worked together to misappropriate Rio’s rights to the Simandou iron ore deposit through corruption.
- Rio says it lost billions of dollars in assets and investments made before its Simandou rights were revoked, and claims it is entitled to treble damages.
Dec. 5, 2014, 11:28 AM
- Japan's Mitsui is set to buy a 15% stake in Vale's (VALE -0.6%) Moatize coal project in Mozambique for ~$450M, Reuters reports.
- Moatize, one of the largest metallurgical coal mines in the world, is considered Vale's best asset in its coal portfolio, but it has not been an easy market in which to find a buyer as coal prices have declined steadily for more than three years.
- Mitsui also may take a 50% stake in the project's rail and port, on condition of contributions to future capex costs.
Dec. 4, 2014, 2:16 PM
- BHP Billiton (BHP -0.6%) is reiterated with a Market Perform rating but a reduced target price of ~$63 vs. $73 earlier at Bernstein, which calls the mining giant a “colossus with feet of clay."
- Despite BHP's impressive portfolio of high quality assets, "this is not enough [for] a premium rating to a company that must place a premium rating on [its] products... something that BHP appears to be unwilling to do, preferring a strategy of volume over price.
- Bernstein also does not believe BHP can afford to increase its dividend except through an increase in gearing, which makes it different from Australian peer Rio Tinto (RIO -2.7%) - neverthless, RIO is downgraded to Underperform from Buy at BofA Merrill Lynch on lower iron ore prices.
- Vale (VALE -1.5%) also sees its stock price target lowered, to $10 from $12 at RBC, amid the subdued outlook for iron ore and near-term funding challenges.
Dec. 2, 2014, 11:46 AM
- Vale (VALE -1.4%) announces plans to invest $10.2B next year, a 26% drop from this year’s budget and the fourth consecutive year in which it has cut its capital expenditures.
- The world's largest iron ore miner plans to spend $6.4B on new projects and $3.8B to maintain existing operations; it expects 2015 iron ore production to rise to 340M metric tons, nickel output to climb to 303K tons while copper is seen rising to 449K tons.
- Vale joins Rio Tinto and BHP Billiton in cutting expenses as Chinese demand cools and iron ore prices drop to ~$70/ton from nearly twice that amount a year ago.
- CEO Murilo Ferreira confirms the company is considering an IPO of a minority stake in its base metals business, but would not conduct an IPO at any price.
Dec. 2, 2014, 7:44 AM
- Vale (NYSE:VALE) is considering an IPO for part of its global base metals business as it looks to fund capital projects amid a collapse in iron ore prices, Reuters reports.
- Vale could outline a plan to list a new entity in Toronto and London as early as today at an investor day event being held in New York.
- UBS estimates that it costs Vale $67 to produce one metric ton of iron ore and get it to China, a tight squeeze as the company looks to complete its $20B S11D iron ore project in Brazil.
Dec. 1, 2014, 11:38 AM
- BHP Billiton (BHP -1.5%) iron ore president Jimmy Wilson said this weekend that plunging iron ore prices had been anticipated given their forecasts that supply growth would exceed the growth in demand, and signals there will be no slowdown in the drive to boost production by global iron ore producers.
- “Even the iron ore price where it is today can induce more volume,” Wilson told Australia’s Nine Network, and "if that volume doesn’t come from our business, it’s going to come from other businesses around the world and other countries around the world.”
- Bernstein analyst Paul Gait recently said: "If BHP do not value the products that they mine but are quite happy to dump them on the market whatever the price, then it is hard to see why anyone should value the company associated with such activity."
- Also: RIO -0.2%, VALE -3.4%, CLF -7.6%.
Nov. 25, 2014, 12:31 PM
- Brazil Pres. Rousseff reportedly will appoint former treasury secretary Joaquim Levy as finance minister later this week, a move that has moved major Brazilian stocks higher although the move had been anticipated.
- Levy, head of Bradesco Asset Management, is considered a fiscal hawk who helped Brazil obtain its investment credit grade as treasury secretary; he will replace Guido Mantega, who said he will step down for personal reasons.
- PBR +1.8%, VALE +0.4%, BBD +0.7%, BSBR +5%, ITUB +0.5%, GOL +1.3%.
- ETFs: EWZ, BRF, BRXX, EWZS, BRZU, BRAQ, BZQ, BRAZ, BRAF, UBR, BRZS, DBBR, FBZ
Nov. 25, 2014, 8:58 AM
- Iron ore trades below $70 for the first time in five years, as rising low-cost supplies by the world’s top miners widen a global glut amid slowing demand from China.
- Ore with 62% content delivered to Qingdao fell 1.2% to $69.58/dry metric ton, the lowest since June 2009, and has dropped 48% YTD.
- “The biggest problem is on the supply side as majors like BHP and Rio are pushing huge volumes into the lackluster demand environment," says Bernstein's Paul Gait, who adds that $65 "feels like a floor."
- BHP -1.8%, VALE -0.6%, RIO -0.4% premarket.
Nov. 21, 2014, 10:06 AM
- Petrobras (PBR +7.2%) and Vale (VALE +9.6%) surge higher in anticipation that Brazil may appoint a new market-friendly finance minister today, perhaps signaling a shift away from the leftist, interventionist policies blamed for Brazil's stagnant economic growth in recent years.
- One of three reported finalists for the job is University of Chicago-trained Joaquim Levy, CEO of Bradesco Asset Management, an arm of Banco Bradesco (BBD +4.9%); he is considered a fiscal hawk who helped Brazil obtain its investment credit grade in a previous stint at treasury secretary.
- The other contenders are said to be central bank president Alexandre Tombini and Nelson Barbosa.
- Also: ITUB +3.8%, BSBR +2.9%, GOL +4.6%.
- ETFs: EWZ, BRF, BRXX, EWZS, BRZU, BRAQ, BZQ, BRAZ, BRAF, UBR, BRZS, DBBR, FBZ
Nov. 21, 2014, 9:13 AM
Nov. 18, 2014, 12:49 PM
- Iron ore extends its tumble deeper into five-year lows as declining home prices in China add to worries that an economic slowdown in iron ore's biggest buyer will deepen and exacerbate an oversupply.
- Ore with 62% content delivered to Qingdao, China, has retreated 47% YTD to $71.80 a dry ton, and Citigroup thinks prices may drop to less than $60/ton next year as output rises further and demand remains weak; China’s bad loans climbed in Q3 by the most since 2005, while new-home prices declined, adding to speculation the cooling economy will weaken further.
- VALE -2.9%, RIO -1.9%, BHP -1.1%, CLF -6%, X -1.4%, AKS -1.9%.
Nov. 11, 2014, 12:52 PM
- Vale (VALE -2.5%) tumbles to eight-year lows after Citigroup recommends selling the stock on falling expectations for iron ore prices.
- Citi's global commodity team downgrades shares to Sell from Neutral as it cuts its forecast for iron ore prices in 2015 and 2016 by 19% to $65/ton.
- Citi sees Vale generating $7.5B in operating cash flow next year, which the firm says is insufficient to cover planned investments, and expects the company to defer maintenance capex, sell more assets and increase net debt.
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